SouthGobi Mulls Listing on Mongolia Stock Exchange (Update1)

By John Duce

April 1 (Bloomberg) -- SouthGobi Energy Resources Ltd., the Canada-listed mining company backed by China’s sovereign wealth fund, is considering selling shares in Mongolia.

“It’s not going to be a major fund-raising measure but would be a way for local people to invest in the company,” David Bartel, vice president of SouthGobi’s mining operations in Mongolia, told an investment forum in Hong Kong today, without giving a time-table. “Our resources are in Mongolia.”

SouthGobi started production at its open-cast coal mine at Tovoot Tolgi in southern Mongolia last year to meet Chinese demand. An Ulan Bator listing would counter criticism from Mongolians that they can’t benefit from foreign mining companies operating in the country, said Alisher Djumanov, chief executive of Eurasia Capital Management, which is acting as an adviser.

Should SouthGobi complete the plan, it would be the first overseas company to list in the country, Djumanov said. About 300 local counters are traded on the stock exchange, he said.

SouthGobi sold shares in Hong Kong for the first time this year. The stock has gained 10 percent since the Jan. 29 listing and traded at HK$124.90 at 3:43 p.m. local time, up 2.2 percent. The benchmark Hang Seng Index rose 1 percent.

China’s sovereign wealth fund purchased $50 million of stock in the Hong Kong sale, SouthGobi said on Jan. 14. China Investment Corp. also bought $500 million of 30-year senior convertible bonds issued by the coal producer last year.

SouthGobi raised about $450 million in Hong Kong and would get far less in a listing in Mongolia, Bartel said.

The coal mining company had a loss of $69.2 million in the three months ended Dec. 31 compared with $17 million a year earlier as production costs more than doubled.

The company produced about 1.3 million metric tons of coal in Mongolia last year, Bartel said.

--Editors: Ryan Woo, Jane Lee.

Source: http://www.businessweek.com

Dollar Softer Ahead of Jobs Report

The U.S. dollar was mostly softer vs. the majors, but traded in very narrow ranges ahead of U.S. jobs data Friday. Markets will be thin due to Easter Holiday, so trading could be volatile. The market is now looking for +184k jobs in March, down from +200k early this week before the weak ADP report. EUR/USD traded at its highest level since March 19. Yen was softer across the board and underperformed the buck, so dollar/yen tested 94 and was at its highest level since August.
The biggest gainers on the day vs. USD were SEK, PLN, BRL, ZAR, and GBP, while only losers vs. USD were JPY, NZD, PKR, and THB. Emerging market currencies were largely firmer, with EMEA again leading the gains. U.S. initial jobless claims fell to 439k (close to expectations), showing continued improvement in the US labor market, while ISM PMI was better than expected at 59.6. CHF was big mover due to rumored SNB intervention. US equity markets were higher, with DJIA, S&P, and NASDAQ up 0.65%, 0.7%, and 0.2%, respectively. European markets were higher too, as DJ Euro Stoxx 50 ended up 1.6%. Asian equities are likely to open up today as Asian ADRs were higher during N. American trading Thursday. Nikkei futures point to an up open for Japan and the softer yen should help Japan exporters. U.S. bond market was lower, as 2- and 10-year yields rose 4 bp and 4 bp, respectively. Supply is heavy next week, with $82 bln in notes and bonds on tap ($8 bln 10-year TIPS, $40 bln 3-year, $21 bln 10-year, and $13 bln 30-year paper) European bonds were mostly higher, as 10-year yields in UK, France, and Germany were down 1 bp, 2 bp, and flat, respectively. Greek 10-year yields were flat, while 10-year Portugal yields fell 4 bp, Italy fell 3 bp, and Spain fell 1 bp.

Oyu Tolgoi investment agreement is effective

Yesterday, the Cabinet Meeting was held and approved the Feasibility Study of Oyu Tolgoi. D.Zorigt Minister for Mineral Resource and Energy, L.Gansukh, Minister for Environment and Tourism, S.Bayartsogt, Minister for Finance announced the press conference.


The Feasibility Study of Oyu Tolgoi will be modified in every 5 years. The Cabinet Meeting also discussed about the state policy on railway. Minister Kh.Battulga briefly informed that a new line of railway Tavan Tolgoi – Sainshand – Choibalsan will be built.

Minister S.Bayartsogt made clarification on the demand letter of certain MPs and commented that “any type of financial resource has time value”. Also he corrected the loan interest as not 5% but 2% per annum. According to the agreement, additional $50 million will be delivered by April 5 2010.


Source: Business Mongolia

Decision on Anod may be left to Parliament

A decision on the widely expected dissolution of Anod Bank has once again been postponed, leaving the bank in business even after March. The Central Bank appointed a Receiver there last November and according to rules, he was to submit his final recommendation by February 22, giving Mongolbank another 30 days to take a decision.

The Receiver is yet to submit his recommendation. It is believed the Financial Regulation Department has suggested that the final decision on the bank be left to Parliament. The new Central Bank Law which took effect on March 1 also facilitates the postponement.

Shareholders are likely to be consulted before a decision is taken. However, Anod Bank is almost certain to go into liquidation if no investor comes forward with MNT250 billion.

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